Differences between Bretton Woods world trade regime and the current world trade system governed by the World Trade Organization

by M
on December 27, 2017
in Economics, Politics
with Comments Off on Differences between Bretton Woods world trade regime and the current world trade system governed by the World Trade Organization

The WTO is very different to how the Bretton Woods system was organized. The earlier system contained only 44 members and was a response to the great losses incurred in the Second World War. The WTO, on the other hand, is more inclusive, in that nearly all nations of the world are part of it. Despite a lot of flack the WTO receives from representatives of Third World nations, there are some meritorious principles it upholds. For example, the member nations are obliged to treat all other members in equal terms, preventing any case of undue favoritism on part of a member nation. Likewise members should treat imported and home-made goods on parity. A related principle is that of reciprocity, whereby, the gains and consequences for all the signatories to the agreement are given consideration. Another measure to ensure fairness is the imposition of commitments made by members. WTO also promotes transparency and accountability for all trade deals carried out under its auspices.

For example, the WTO has failed to reduce the gap between the wealthy and the poor of the world. It cannot evade this criticism by pointing fingers at national governments. In the four decades since the neo-liberal program was put in place, the world has become polarized in terms of economic development. Many underdeveloped nations in sub-Saharan Africa, Latin America and South Asia were left out of the prosperity boom. The WTO regime is equally unable to prevent crony capitalist tendencies whereby, in most participant nations, an oligarchy of politicians and businessmen collude to promote vested interests. This is a hazardous phenomenon which has undermined democracy in many nations. With the free flight of capital across borders, the citizen franchise to vote is weakened by the veiled veto power exercised by global investment firms. Along with democracy, internal economic stability of many nations have also been weakened under the neoliberal regime of the WTO. These are areas that need immediate redress, for, otherwise, social fissures and eruptions of civil war across class lines will become rampant across the globe.